Improvement in 'speed, safety, comfort, intelligence' of mobility
German-based global leading automotive supplier Continental is a major player in the industry that has benefited from China’s reform and opening-up policies, now in their 40th year. It sees further opportunities ahead.
The company first came to China in the early 1990s, evolving into a technology company with 27 locations, 17 research and development centers and over 25,000 employees.
Enno Tang, president and chief executive officer of Continental China, said that China’s reform and opening-up policies have enabled the company’s business to grow by supporting the Chinese people with quality products and technologies for the better mobility.
Tang was born in 1971 in Shanghai. After joining Continental in 2004, he held several managerial positions in China and Germany. He has headed up China operations since June 2017.
Q: What is the most impressive change you have seen in China under the reform and opening up policies?
A: The most impressive thing is the significant improvement in the quality of life for Chinese people, especially in basic necessities like food, clothing, shelter and mobility. Continental is committed to providing quality products and technology solutions and services for China’s mobility.
In the 1970s, a large population of Chinese people traveled by bicycle for short distance mobility. Nowadays, personal transport has been replaced by cars and other public transportation means like metro in the cities, making mobility more diversified, both in terms of individual mobility and shared mobility. At the same time, intercity mobility like airplanes and high-speed trains has developed very fast. To sum it all up, there have been significant improvements in the speed, safety, comfort and intelligence of people’s mobility in China in the past 40 years.
Q: How do you evaluate the importance of reform and opening up in China’s growth?
A: China’s economy has been booming for the past 40 years. Reform and opening up have supported the government to introduce advanced technologies and modern business system into the domestic scene. Thanks to China’s opening up and reform policies foreign companies like Continental have been able to make great contributions to China’s economic development and generate the business growth.
As an international company with over 140 years of history, Continental established its first joint venture in China in 1994. We really appreciate the reform and opening-up policies, which have enabled our business to flourish in the Chinese market and also make contributions to improving life for Chinese people.
Q: What is the most important reform and change in the auto-parts industry? And what can be further improved?
A: In the past 40 years, China's automotive industry, including the auto-parts sector, has gone from small to large, from weak to strong. Since 2009, China has become the largest automotive country in both production and sales in the world. The automotive industry, with support from auto-parts companies, is continuously growing and playing a more important role in the national economy.
Many international suppliers like Continental came to China at early stage mainly supporting our international OEM (original equipment manufacturer) customers. Meanwhile following our strategy of “in the market, for the market”, our customer portfolio covers not only the international OEMs but also almost all local Chinese OEMs, who have the increasing share in our business. On the other side, the local auto parts companies have been greatly developed from the perspective of size and competitiveness. Currently, they are not limited to providing products and technologies for the Chinese market, but also for international manufacturers in the overseas market. So we can witness a clear trend of globalization in the auto-part industry.
In recent years, fast development of electrification, intelligent-connected vehicles, autonomous driving and shared mobility has created a new wave of technological breakthroughs. Innovation is the significant pivot to keep a leading position on this transformational stage. Efforts to upgrade technological innovation capability has become the main objective of all auto-part companies.
Continental is committed to progressing technological innovation and strengthening our system solutions to drive future development of China’s mobility. In 2017, our worldwide expenditure for research and development was 3.1 billion euros (US$3.59 billion), corresponding to 7.1 percent of sales. We have nearly 3,000 engineers in China and the number will double in the next five years. Since 2010, we applied for over 3,027 patents, and 1,800 of them were granted in China. Our research and development center in Chongqing will open in the first half year of 2019, and it’s expected to create jobs for 400 engineers by 2020 and 1,000 jobs by 2025.
Q: How has your business strategy changed since you entered the Chinese market?
A: In the early 90s, our business strategy was to localize production and supply, while providing high-quality and locally made products for joint venture customers.
As China’s auto industry changed, our strategy changed, too. We have localized not only production but the entire value chain, and we have fully supported the development of local OEM customers. Together with our business partners, Continental is driving China’s future mobility with our leading technology.
Q: How much money have you invested in China? How many staff do you employ in China? What are your investment plans here in the next five years?
A: Continental has kept investing in the local market since its entrance. Our employees have steadily increased to more than 25,000 now. Continental has invested around 1.3 billion euros in China over five years to 2017, and we plan a comparable level of investment for the coming five years.
Q: Foreign companies are always urging further and faster reforms. What specific new initiatives would help your business in China?
A: The intelligent connected vehicle has become the future of the global automotive industry in the age of digitalization. Strategic planning, including infrastructure and the establishment of a policy framework by Chinese government is undoubtedly beneficial for our development.
To solve increasingly environmental problems, Chinese Premiere Li Keqiang announced the “defending blue skies” policy to speed up air pollution controls. At the same time, the Chinese government is supporting the development of new energy vehicles. Continental is investing heavily in new technologies to meet the increasingly strict China's National VI emission standard A and B for light-duty vehicles, providing flexible electrification solutions to make the air cleaner.
Q: What’s the best part about doing business in China? What’s the most difficult?
A: China is a huge, dynamic and fast changing market full of fierce competition. Future mobility will be transformational and further diversified with enormous business potentials. There are opportunities and challenges at the same time for us. Continental is now actively transforming itself from a traditional auto-parts company into a technology company, a mobility service provider. In order to make our structure more flexible and agile to meet future challenges, we are now realigning our organization. During the transformation, talent is the key for our future success. In today’s digitalization era, software professionals are a focus of each technology company, and Continental is sparing no efforts to attract, develop and engage the excellent professionals.
Q: What are Continental’s plans in the fourth quarter?
A: It will be a busy quarter with full of events. We have just signed the investment agreement with Changsha government to build a greenfield automotive electronics plant there next year. At the end of October, the construction of the Continental Automotive Systems (Shanghai) Co. Phase III in Shanghai Jiading district will begin, expanding our production capacity in electronic brakes and advanced driver assistance systems products. We are also speeding up construction of the new research and development center in Chongqing, which is expected to officially open in the first quarter of next year. At the same time, we are realigning our organization. Specifically, the Powertrain division will be transformed into an independent legal entity by the end of this year, enabling it to respond faster to the market and customer requirements in terms of combustion engine fuel savings and emissions reduction, as well as electrification technologies.